Performance based advertising refers to a type of advertising in which an advertiser pays only for a measurable event that is a direct result of an advertisement being viewed by a consumer. For example, paid inclusion advertising is a form of performance-based search advertising. With paid inclusion advertising, an advertisement is included within a search result page of a key word search. Each selection (“click”) of the advertisement from the results page is the measurable event for which the advertiser pays. In other words, payment by the advertiser is on a per click basis.
Another form of performance-based advertising includes paid placement advertising. Paid placement advertising is similar to paid inclusion advertising in that payment is on a per click basis. However, with paid placement advertising an advertiser ranks a particular advertisement so that it appears or is placed at a particular spot, e.g., at the top of a search engine result page, thereby to increase the odds of the advertisement being selected.
Generally, advertisements may be as simple as a listing returned by a search performed on an on-line directory service. For example, a search conducted on Yahoo!'s Local Yellow Page site for “take-out Italian restaurants” may return a laundry list of results. However, it is difficult to determine whether calls made by a user to a merchant were actually made because of the advertisement returned by the search.
In one sense, the problem lies in today's pay-per-click standard. It works fine for e-businesses who have web sites, but for the millions of businesses who don't—local plumbers, roofers, florists—clicks don't mean anything. These advertisers need to see a correlation between what they're paying for and what they're getting. Clicks don't show that correlation—a report at the end of the month showing that you got 20 clicks doesn't show value to a local plumber. A phone call, however, does demonstrate value to the advertiser—he can hear when the phone rings and evaluate the revenues that phone call generated versus the amount he spent on the advertising. Therefore, there is a clear need to change the existing model.